Mamoon Hamid
speaker
146 appearances
1 recordings
1 series
first heard Oct 2024
last heard Oct 2024
Mamoon Hamid’s voice in public audio — every appearance, attributed to the second.
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Appearances
But it will probably go down by 10x or 20x. Do we expect to see 10x better models or 20x better models? That'd be pretty insane, right? Don't you think that the 20x better model is going to be pretty insane for all of us?
I'd say if I look at the... Do you know what the world's GDP is? No. It's about $100 trillion. Of that, 50% to 60% is in labor. Technology is roughly like 15% of it. And over the next decade, if we grow at the more traditional GDP growth rates... It'll be anywhere from 125 to 130. What if technology grows from 15% to 20%?
That's like 25 trillion in technology companies, up from, say, 15 trillion today. So 10 trillion of annual spend will get created for technology companies over the next decade. When you think about $200 billion spent on CapEx or $600 billion spent, I think the question is really the $200 billion should result in $600 billion of revenue.
I think the revenue will be there because, again, we're not just tackling software, linear software, as I call it. We're tackling labor. labor shortages and things that humans can do, but it's the worst part of our job, or we don't have enough people who can do the job. Again, I go back to the example of doctors. We're not producing enough doctors. We're not producing enough developers.
We're not producing enough lawyers. Those types of jobs where we're going to see the immediate, more near-term impact.
What's the same then? The same is we're in the business of backing incredible founders who are... perseverating on a problem set that may be a hair on fire problem for lots of folks. And they're building the right product at the right time. That's the same. We're in the business of finding those people who are doing that job and trying to build a business.
And hopefully we can help them a little bit in building their business. So what's different? What's different is that there is more capital in our industry than ever before. That capital at times thinks that everything will be a deck of corn. You're overfunding some companies. Maybe they deserve it because they're the far and away leaders.
But at the same time, there's another half a dozen, dozen competitors that get funded. What
How do you think about that? We are primarily early stage focused. We have an $800 million fund for that. And then we have a $1.2 billion growth fund. This team of seven folks invests out of both of those funds. I would characterize us as boutique because we're kind of a small team that believes in the craft of venture capital. We think it's a business that doesn't scale, actually.
We're not scaling through people, but we have the scale of capital. Our growth fund even, half of the dollars are invested in our best companies from our early stage funds. So it doesn't require us to have a large team, so to say, because we're already involved with some of these companies like Rippling and Glean and Figma that we're doubling down into out of our growth fund.
Yeah, so reserves is one. It's like when you have an early stage fund and we typically invest in about 35 companies per fund. So how much do you reserve for each one of those investments? We try to invest, and we've looked at the math, more than half in that first check.
So let's say you're doing over the life of the company, you're investing $25 million in that early stage company, but you're starting out with a $15 million check. And then you're reserving another 10 for the series B and beyond. And it's generally worked out pretty well. So you're 60% initial, 40% for subsequent two rounds? That's a rough, rough math.
And then we move dollars around, you know, a company may get acquired early or a company might shut down and we'll rejigger those dollars around. It's an art and a science. When you don't do it, how do you communicate that to founders as well?
It is a tough, if you're not giving someone, well, I think because we're on the board and there's so much signaling involved in us doing, let's say nothing, we generally do something. And I think that's allowed us to get away with doing a small amount in a follow-on round.
In many cases, if it's a really attractive round where folks want as much as possible and we're doing a little bit less than prerata, everyone's happy. But if it's the, we need the money and you're not going to invest in this round. These days, there's pay to play. So if you don't invest, you get wiped out. Okay, so don't want that. So there are different scenarios here.
I've had companies that are one week away from cash out become public companies. Wow. Yeah. Can you say? Yeah, sure. Box. Really? Yes. Wow. There was a point in time where we had to do three bridges at Box back in 2008, 2009. Why? What was not working? The market sucked. Nobody wanted to invest in a cloud storage business that would get eaten up live by a Google or a Microsoft.
Harry, you and I, we're in the risk business, my friend. You believe in the people. It goes back to like, these are incredible people. Aaron Levy, Dylan Smith, incredible founders, like legendary to me. And it was just a dislocation in the market where the market did not understand how to, well, one, it was just afraid.
It was a global financial crisis and nobody wanted to invest in anything because back to your point of reserves, everyone was trying to save money for their own companies. In the same vein, we had to take our reserves and put it in the box. And we weren't investing in new companies at the time. And that happens in every sort of cycle, down cycle like this.
I think we all know like some of the best investments come out of that cycle. And so we got to invest more dollars in the box at a $25 million valuation. Every incremental dollar, two, three million dollars in bridge that was being done, done at that valuation.
They don't innovate anymore or fast enough. They are what big companies become, which is, you know, you're trying to protect your turf and you're not disrupting yourself. And someone else comes in to disrupt you and starts taking away revenue from you. You mentioned Box there. Box, obviously, IPOs.
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